Last month, Utahns crushed the state Legislature’s attempt at tax overhaul beneath the weight of 145,000 referendum signatures.
But pieces of the reform plan have started to poke through the rubble, as lawmakers look at providing some form of tax relief to Utah residents this year.
Utah Rep. Tim Quinn, for one, wants to expand the dependent exemption to reverse the effects of federal tax reform in 2018. Meanwhile, Rep. Walt Brooks, R-St. George, has sponsored HB181, a proposal aimed at providing a Social Security tax credit, and Rep. Sue Duckworth, D-Magna, is trying to exempt feminine hygiene products from the state’s sales tax with HB193.
All three proposals were, in some form, part of the massive tax package that state leaders approved during a December special session — an unpopular bill that lawmakers reversed just a month later amid an outcry from their constituents. In the weeks following the one-day special session, a bipartisan group managed to gather more than 144,000 signatures in favor of putting the tax bill on the ballot for possible repeal.
Quinn counts himself as one of the sweeping measure’s opponents and voted against it in the special session because, among other reasons, it would have hiked the sales tax on food. But the Heber Republican doesn’t think the public’s reaction against the bill had much to do with the portion that would have expanded the dependent exemption.
“There’s always people who don’t like something,” said Quinn. “Child exemptions have been in place for decades and decades and decades, not only on the federal side, but in most states across the country.”
His bill, HB260, would increase the per-child exemption for families from $565 to $3,113 and gradually phase out the benefit as a filer’s income rises. Legislative analysts haven’t completed a full review of the measure, but initial estimates indicate the change would put a $50 million dent in income tax revenues, Quinn said.
His proposal to roughly quintuple the dependent exemption would provide a larger break than the special session tax bill, which would’ve expanded the exemption to $2,500. But Quinn said he “can’t imagine we won’t have support” for the legislation.
“It gives back all of the money that was taken to those who we felt were the most needing of it,” he said.
State lawmakers do have some budgetary wiggle room this year, having set aside about $80 million of income tax money for possible tax relief. However, legislative leaders have so far been noncommittal about whether they will capitalize on it.
Senate Majority Leader Evan Vickers said Wednesday that legislators will consider any tax relief proposals that surface this session, but he believes there are risks in making isolated tax cuts outside of a comprehensive package.
“If we decide to do some of those, we just have to be cautious,” the Cedar City Republican told reporters.
The special session bill would’ve balanced relief on the income tax side with increases on the sales tax side in an effort to protect education funding, Vickers said. Passing scattered tax cuts doesn’t lend itself to the same big picture analysis, he continued.
Vickers also noted that Gov. Gary Herbert, who is not running for reelection, has suggested holding off on another tax reform push until his successor takes office next year.
House Speaker Brad Wilson on Wednesday declined to commit to a timeline for the Legislature to restart discussion on tax reform and cuts, but he said those talks are likely.
“We will see a tax cut,” Wilson, R-Kaysville, said. “The timing of it, I think, is the question.”
He said lawmakers are looking at areas where education expenses can be removed from the general fund and shifted to the education fund, which would free up sales tax revenue for other programs. But those determinations can be “tricky,” Wilson said, and don’t necessarily answer the broader question of how the state’s revenue structure should be set up.
“The structural problem and tax cuts are not necessarily the same issue,” Wilson said. “They can be, but they can be different as well.”
Tribune report Benjamin Wood contributed to this article.